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February 27, 2022 at 2:34 pm
Hello Sir I have two questions. a) Is it a mandated requirement to make a bank reconciliation statement? Or could we just make the corrections to the cash book without having to actually prepare a bank reconciliation statement?
b) If I am doing an audit for someone and I’m looking at bank statements and cash receipts over a 6 month period. Do I still need to make the bank reconciliation statements at the end of each period?
Im curious to know whether making these statements are simply for correction purposes or are they actually mandated by law
John Moffat says
February 27, 2022 at 4:28 pm
They are certainly not mandated by law. However they are one of the most obvious checks that can be made and most companies will do them once a month. The auditors will do them at the end of whatever period they are auditing.
January 30, 2021 at 1:03 pm
Hello, another great lecture, however I do have one question. Could we not treat outgoing cheques as payables? Both are expected payments from the business and we have not paid any money until it has left our account? Or could we not wait until the payment has left our account to record this supplier payment? Thanks!
January 30, 2021 at 3:44 pm
We record the payment in the cash account immediately we write the cheque. It is so that the balance shows how much we still have available to spend.
October 24, 2020 at 11:57 am
Hi Prof, I’m little bit confused here, why’re you always crediting the bal. of my cash to the credit side, let me give an example I have $1000 and give out $20 USD my bal. should only appear or the debit side of my account, I’m from Liberia.
October 24, 2020 at 3:52 pm
If you start with a debit balance of $1,000 and then pay out $20, you credit cash with $20. When we come to balance off the account, the missing figure to make both side add up to the same is $980 on the credit side. We then show that on the opposite side as a debit balance on the account.
I explain the correct way to balance off accounts in the earlier lectures on double-entry bookkeeping.
April 11, 2020 at 9:30 pm
Thank you for your wonderful lessons. Like others, I have a question too.
This questions is related with the example on the next lesson but I want to relate it too with video of the lesson above til min 12:30 regarding Lodgements.
In the example 1 on next lesson, item 5: there’s a lodgements of $4000 not yet appeared on bank statement, (according to video above til min 12:30 on lesson above) means that this amount is already receipt in our cash account that have a Debit Balance of $11,820. If so, that this amount of $4000 IS INCLUDED in balance $11,820 of cash a/c, then Why this amount is ADD in bank reconciliation statement at the end to explain the difference timing and adding this value to adjust/reach the amount of $15,000 on bank statement???
Thank you again for yours magnificent lessons!
April 12, 2020 at 11:29 am
The 4,000 is already included in the cash book balance. However it is not on the bank statement and therefore the balance on the bank statement is lower by 4,000. So to make them agree the balance on the bank statement needs increasing by 4,000.
April 12, 2020 at 1:25 pm
Sir, thank you for the fast reply and for the clear explanation.
The ACCA lessons seems more easy with your lecture.
Thank you again!
February 1, 2020 at 6:35 pm
good way of explaining sir, amazing understood the way how to do bank reconcilitions amazing
August 24, 2019 at 12:45 pm
Who else thinks John Moffat is very funny.
Especially that example of money being mistakenly deducted from his sister’s account
Great lecture sir.
Love the way you simplify things
August 24, 2019 at 3:18 pm
Thank you for your comment 🙂
January 8, 2023 at 6:36 pm
Haha yes agreed!
October 23, 2018 at 1:59 am
Hi sir, If I received some cheques from some clients in September, I would debit the bank and credit the Receivables but I never lodge those cheques until October. Is those cheques recorded as cash in hand on the balance sheet? Or they are still apart of the bank but is recorded is added as outstanding lodgement on the bank reconciliation
October 23, 2018 at 7:09 am
The cheques are entered in the cash account as received when the cheques are received. If they have not yet been paid into the bank, then they also appear on the reconciliation statement as outstanding lodgements.
October 23, 2018 at 11:29 am
Thank you sir, that is what I know and the auditor is telling me that they are cash in hand because they weren’t lodge until the following month. Thank you so much again.
October 23, 2018 at 11:44 am
And I know for a fact that cash in hand refers to coins and notes (paper money).
October 23, 2018 at 4:08 pm
In the financial statements we normally don’t show cash in hand and cash at bank separately.
With regard to what the auditor has told you – that is correct and is what I wrote in my previous reply.
The cheques received are entered in the cash amount when they are received and therefore do appear as an asset in the financial statements. If they have not been paid into the bank then they also appear on the bank reconciliation statement, otherwise the cash balance will not agree with the bank balance.
Have you watched the further lectures on bank reconciliations?
October 23, 2018 at 9:18 pm
Yes sir I did. However, the auditors do show Cash in Hand different from Cash at Bank on the balance sheet. Hence why I am saying it shouldn’t be shown as cash in hand because they use the cash in hand only for the petty cash.
October 24, 2018 at 9:10 am
Fair enough, although it is irrelevant for the exam 🙂
October 24, 2018 at 12:15 pm
Thank you so much sir for understanding. I do appreciate this and thank you for allowing me to understand too. I’m taking this exam in December.
May 26, 2018 at 2:41 pm
Sir is credit transfer credited in the cash book balance or not?
May 26, 2018 at 4:21 pm
If it is a payment by credit transfer then yes – we credit cash.
It is a receipt by credit transfer then we debit cash.
(The word credit in credit transfer is nothing to do with debits or credits – it is just another word for a bank transfer)
May 26, 2018 at 9:03 pm
right Sir but if question does not mention if it is payment or receipt so how will we treat credit transfer ? because i have been doing questions which do not mention of it being either payment or receipt
May 27, 2018 at 9:48 am
Exam questions will make it clear.
May 6, 2017 at 3:25 am
May 6, 2017 at 9:51 am
Thank you 🙂
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